A Big 3 Band-Aid

Late yesterday congressional negotiators reached a compromise on what to do with the Big Three, at least in the short term. With the Bush Administration refusing to deal and the Senate Republicans adamant that the tarp money not be touched, Dems had little choice but to take money from the DOE’s $25 billion modernization fund. In order to limit the damage to that fund — $21 billion of which carmakers are already counting on to help get them from SUV-land to Prius-world – the Dems are only taking as much as needed by GM and Chrysler to get them trough till inauguration when Obama can step in and sort out a comprehensive solution, presumably he’ll be able to use tarp so won’t need congressional action. Speaker Pelosi, who, facing outrage from enviro groups, had been against using the modernization fund, was careful to underline that the move would not endanger the program. “We will not permit any funds to be borrowed from the advanced technology program unless there is a guarantee that those funds will be replenished in a matter of weeks so as not to delay that crucial initiative,” she said in a statement.

Politico reports that it was yesterday’s dismal jobs numbers that made both sides blink and take a step back from their dangerous game of chicken with the Big Three. Both chambers are expected to reconvene next week to pass the compromise bill. On the bright side for the groveling CEOs, talks with Obama will be a lot less public – so the humiliation will be behind closed doors.